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ITC eyes another buyout
Wed, 20 Jan 01:30 pm

Indian markets continue to remain choppy during the last two hours of trade. The markets were trading marginally in the positive aided by buying in the media and auto space. Heavy selling was, however, witnessed in the realty and oil and gas space.

The BSE-Sensex and the NSE-Nifty have lost most of the opening gains. While trading above the dotted line, the BSE-Sensex is up by 31 points while the NSE-Nifty is up by 3 points. BSE-Midcap Index is trading lower by 3 points while the BSE-Smallcap index is up by 39 points. The rupee is trading at 45.95 to the US dollar.

Yes Bank declared its 3QFY10 results with strong growth across metrics. Advances grew by 71% YoY during the quarter while deposits grew by 63% YoY. This growth comes in spite of muted credit growth in the industry. Net interest margin (NIM) improved by 0.3% to stand at 3.1% in 3QFY10. Current and Savings account (CASA) deposits grew by 79.4% YoY while term deposits grew by 61%. NII grew by 69.5% in Q3FY10 due to improvement in advances and higher NIM. The banks also managed to curtail its gross NPA to advance ratio at 0.3% during the quarter.

ITC which is well known for buying up competition has been eyeing a stake in Hotel Leela Venture. The company had started acquiring shares in the hotel company when the price of the stock was Rs 20. While the Nairs, promoters of Hotel Leela Ventures, have not clearly said anything about the deal, it is believed that ITC is in talks with them. While the Nairs hold 52.5% of the stake currently, there is Euro 46 m of FCCB coming up for conversion in October 2010. These are priced at approximately Rs 59.4. In the case of conversion the stake of the promoters will fall to 42-43% levels. However, if the FCCBs are not converted the company will have to pay for the bonds from its cash flow or by raising more debt. The debt to equity ratio of Hotel Leela in FY09 was 1.26 times. ITC currently has 7.9% stake in the hotel company.

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